Reuters<\/i>
\n MUMBAI
\n 27, July 2009<\/i><\/p>\n
Apparel retailers are poised to chase consumers in small towns, besides lower operating expenses, while aiming for a balanced presence across markets in a challenging economy.<\/p>\n
Exploring the relatively unexplored markets are S Kumars Nationwide, Arvind Ltd, Alok Industries and Welspun India’s Welspun Retail.<\/p>\n
As the economic slowdown hurts retailers in large cities, smaller towns are less impacted due to their dependence on agricultural income and independent enterprises.<\/p>\n
“The rationale is in fact the tier 2, 3 and 4 cities, the amount of money that is available there and the amount of consumer growth happening there, there is a big shift happening for the consumer, especially in garments,”
\n Nitin Kasliwal, managing director of S Kumars, said.<\/p>\n
S Kumars, known for premium brands such as Reid & Taylor and Belmonte, is launching a ‘mass brand’ for the tier 3 and tier 4 cities at “very reasonable rates,” said Kasliwal.<\/p>\n
Rival Arvind, which already has about 30% of its revenue coming from tier 2 and tier 3 cities, plans to locate a significant share of 30 outlets to be added this year in tier 3 cities, said J. Suresh, chief executive, brand and retail.<\/p>\n
The company plans to spend about Rs400 million for expansion this year, he said.<\/p>\n
Branded apparels and home furnishing maker Alok, owner of the H&A brand, is planning to triple its store count by next March, with a strong focus on the tier 2 and tier 3 cities.<\/p>\n
“Once we reach the 300 target, then my share coming from tier 2 and tier 3 cities will be about 75%,” said Umang Garg, vice president, domestic business. It already has outlets in Moga and Firozpur in Punjab, and Latur in Maharashtra.<\/p>\n
Welspun Retail, with 200 stores under its ‘Welhome´ brand that targets budget customers in home furnishing category, plans to add 70-80 stores in FY11, with 30% focused on villages.<\/p>\n
BALANCING ACT<\/p>\n
Besides the potential of the markets in the interior, it is also a balancing act for companies wanting to mark their presence in different markets to leave no consumer untapped.<\/p>\n
“For long term perspective…it makes immense sense for us to be in all strata of the markets, of course with different brands,” said Kasliwal.<\/p>\n
As big brands target budget consumers with value-pricing range, firms believe brand awareness is growing in small towns.<\/p>\n
“The market is evolving, today if I make inroads, that would pay dividends tomorrow,” said Welspun Retail director Dipali Goenka.<\/p>\n
“There are lots of towns and cities where companies don’t have the distribution reach or retail presence. That is a new market for them,” Devangshu Dutta, Chief Executive, Third Eyesight, said.<\/strong><\/p>\n Skyrocketing rentals in big cities also makes moving to tier 2 and tier 3 cities attractive.<\/p>\n High rentals in big cities make even covering the cost of merchandise difficult, while small towns give 8-12 times of the rent in returns, said Alok’s Garg.<\/p>\n “You can have a profitable business by opening more shops in smaller towns with lower rentals.”<\/p>\n","protected":false},"excerpt":{"rendered":" Reuters MUMBAI 27, July 2009 Apparel retailers are poised to chase consumers in small towns, besides lower operating expenses, while aiming for a balanced presence across markets in a challenging economy. Exploring the relatively unexplored markets are S Kumars Nationwide, Arvind Ltd, Alok Industries and Welspun India’s Welspun Retail. As the economic slowdown hurts retailers […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-1439","post","type-post","status-publish","format-standard","hentry","category-press-quotes"],"yoast_head":"\n